More Scrutiny Ahead for the IRS

By Nancy Cook

May 20, 2013

Think the Internal Revenue Service scandal will fade away in time for summer? That may be wishful thinking on the part of the White House and congressional Democrats, who are poised to endure another week of congressional hearings in both the House and Senate.

Republicans experienced their first live and in-person brush with the IRS’s misdeeds and internal machinations at the House Ways and Means Committee hearing on Friday, a crowded, four-hour event that seemed to excite and enrage the committee’s Republican members.

As Rep. Peter Roskam, R-Ill., put it in his questioning of former acting IRS Commissioner Steven Miller, “On one the one hand, you’re arguing today that the IRS is not corrupt. But the subtext of that is you’re saying: ‘Look, we’re just incompetent.’ That is a perilous path to go down.”

The hearing’s revelations will only feed into this week’s ongoing congressional investigations that surround the IRS and, more specifically, the Treasury inspector general’s recent report that showed the agency inappropriately targeted for special scrutiny conservative groups seeking tax-exempt status from 2010 to 2012. That report concluded that the IRS did this out of mismanagement instead of political malfeasance, yet this has done little to appease House Republicans. In a blistering opening statement, Rep. Dave Camp, R-Mich., the normally low-key chairman of the Ways and Means Committee, called the IRS’s actions an “abuse of power.”

“This revelation goes against the very principles of free speech and liberty upon which this country was founded,” he said.

The Senate Finance Committee plans to take up where Ways and Means left off in a Tuesday hearing, led by Chairman Max Baucus, D-Mont. There, former IRS Commissioner Douglas Shulman will testify. Shulman has not yet publicly spoken since the release of the Inspector General’s report last week. Originally appointed to the position by President George W. Bush, Shulman left the agency in November 2012 at the end of his term. The IRS has been without a politically appointed commissioner since the fall.

The House Committee on Oversight and Government Reform will hold another hearing on Wednesday, featuring Lois Lerner, who spearheaded the IRS unit for tax-exempt groups. Increasingly, Lerner is at the center of the scandal, because she oversees the employees who created the criteria to evaluate social-welfare groups, or 501(c)(4)s, in the months leading up to the presidential election.

Lerner also came under fire last week for deciding to casually bring up the IRS’s role in examining certain conservative groups at a law conference in Washington, instead of first bringing that information to Congress or mentioning it to the Ways and Means Committee when she appeared days earlier.

Among the revelations from Friday’s hearing that will reverberate this week:

Miller, the former acting commissioner of the IRS, said that he did not believe the agency’s missteps were illegal, a charge that infuriated House Republicans.

Deputy Treasury Secretary Neal Wolin knew of the inspector general’s audit of the IRS in June 2012, though he did not know anything about its findings, according to Treasury Inspector General J. Russell George. This data point will become a key one as House Republicans probe the question of who knew what and when, in an effort to link the IRS scandal to the Treasury Department and the White House.

Lerner’s supposed slip of the tongue at the law conference last Friday—which originally set the IRS story in motion—was actually a question planted by Lerner with a lawyer who was present, according to Miller’s testimony on Friday. This insight—that the revelation was staged and not spontaneous—puts an even larger target on Lerner, which could result in mounting pressure for her resignation in the coming days.

The Treasury inspector general said he and his team were continuing to examine the IRS’s tax-exempt group and its activities.